Mining for Opportunity in Mongolia

In a nation where nearly 45% of the population lives in one city—the capital, Ulan Bator—those who reside elsewhere in the vast reaches of the landlocked state of Mongolia have long been isolated from the trappings of modern life. However, in recent years, as the economic development and technological advancement that has long been a characteristic of Western Civilization has slowly made its way eastward across the Siberian steppes, Mongolia has been able to take advantage of modern mineral extraction techniques to begin the mining of vast, valuable mineral deposits in the Gobi Desert that have long been thought impossible to extract.

The economic implications of this monumental undertaking are not limited to Mongolia. At full operating capacity, it is expected that the Oyu Tolgoi deposit will produce between 300,000 and 400,000 tons of gold and copper every year. While these precious and abundant resources lie within Mongolia’s borders, other nations—especially Russia and China—expect to benefit from this windfall as well. Mongolia has long relied on Russian fuel imports, a fact that has in the past left Mongolia greatly susceptible to political pressure from Moscow, and will probably only grow even more blatant as Mongolia begins to realize profits from the mining project.

It is not hyperbole to say that the copper, gold, and other minerals buried thousands of feet below the Mongolian steppes have the potential to permanently alter the course of Mongolian economic history. However, recent spats between the Mongolian government and the Rio Tinto Group, the multi-national development corporation hired to oversee the extraction of the minerals, have threatened to derail the historic $6.2 billion operation. The spiraling costs of the project—$2 billion over-budget and rising—have been a cause for a concern for Mongolian officials, and they have not shied away from voicing their displeasure to Rio Tinto executives. Furthermore, the recent announcement that operating costs might increase and mineral production may decrease due to budgetary issues threatens to even further inflame tensions. Indeed, it seems as if the conflict between the two parties has reached a boiling point, as Rio Tinto recently threatened to shut down mine operations indefinitely until the issues can be resolved.

Despite the possible problems that the continued development of Oyu Tolgoi might cause, this project is one that must continue. The potential revenue from the mine could do much to alleviate Mongolia’s substantial lack of infrastructure and development outside the capital, and would provide funding for much-needed aid in the more impoverished parts of the country. Regardless of any potential conflicts between Mongolia, China, and Russia—not to mention the present spats between Mongolian officials and Rio Tinto executives—Mongolia must, for the good of its people, swallow its pride and work to swiftly resolve the disputes that are currently keeping the project in limbo.